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Investing Specialists

Your Financial Life Is Complicated; Your Portfolio Shouldn't Be

The more idiosyncratic your human and nonportfolio financial capital, the more 'vanilla' your portfolio should be.

The uptake of index products has been widely hailed as an expression of investors' preference for low-cost investments. And a quest to lower total portfolio costs and cut out higher-priced, underperforming funds may well be the main driver of the enormous asset flows into passively managed products: It hasn't been lost on investors that most active funds, especially high-cost ones, don't beat their cheap index counterparts after fees.

Financial advisors, meanwhile, know that the best way to improve their own value proposition is to reduce their all-in charges; cutting costs at the fund level helps advisors maintain their own fees as they do so.